How personalization is transforming the media industry

From personalized content to ‘advicetising’, personalization is revolutionizing the way users consume content and how media companies monetize it.

Every day we create 2.5 quintillion bytes of data¹ and upload 300 million photos to Facebook.² Every minute we upload 300 hours of video to YouTube.³ Having great content is no longer enough to stand out amid this overload of information that Internet users face. In this article, we look at how media enterprises can get consumers to engage with their content and advertising through personalization and contextualization.

Personalization and contextualization is one of three themes that we believe will be central to the digitization of the media and entertainment industry over the next decade. The other themes we examine are content fragmentation, and partnerships and industrialization.

Personalized advertising

Personalized advertising is becoming increasingly important as traditional advertising is becoming less effective at engaging consumers, especially younger ones. Ad clutter on desktop and mobile browsers is creating bad user experiences, damaging brands and encouraging users to turn to ad-blocking software. The negative impact of digital advertising on user experience seems to be the real price of free content.

Instead, brands need to be smart and embrace ‘enhanced pull advertising’. They need to apply creativity and innovation in communicating a product or brand’s value proposition without actually advertising it, through content marketing, word-of-mouth referrals, customer relationship management, and sales promotions and discounts. An enhanced version of this includes use of branded content marketing to entertain consumers, entice participation with the content, use of expert reviews, articles of bloggers and other strategies to foster conversations around a product.

Personalized content

The amount of new content published every week would take longer than a human lifetime to consume. In this cluttered digital space, consumers need a trusted filter or personal guide that can separate the signal from the noise and deliver personal recommendations to the user.

Contextual information is very important here, as the user can have very different tastes or needs depending on the time of day, where they are and what they are doing. Above all, the recommendations need to be presented elegantly in a clean, seamless user interface.

The media enterprises that have the biggest opportunity to benefit from offering personalized content will be content aggregators, which can encourage users to spend more time on their platforms through enhanced recommendations of related content. Perhaps the most significant test for the firms that create recommendation engines will be to win and retain consumers’ trust, and convince them that they are receiving unbiased information and recommendations. However, as consumers’ tastes and preferences are prone to change, recommendation systems have the potential to enrich the cultural life of consumers by encouraging the discovery of new content and information.

Data privacy and transparency reform

Catastrophic breaches of data security happen all too frequently. In recent years, personal data from tens of millions of consumers has been compromised in separate incidents (see Figure 1).

According to Accenture, 54% of digital consumers are cautious about the information they share due to lack of confidence in the online security that protects their personal data. As Internet businesses become increasingly global, their attractiveness as targets for hackers and criminals increases, raising the likelihood of further data leaks in the future without significant improvements in data security.

In tandem with these concerns over data security, regulators have started to take a more aggressive approach to the technology sector. Most notably, the European Commission is taking on Google in a regulatory battle over its dominance of the Internet search and mobile operating systems markets, and investigating whether it is presenting search results independently of its own commercial interests.⁷ As a consequence of consumer concerns and regulatory pressure, media companies are moving toward communicating more transparently with their customers about how their data will be used. Responsible companies are already restricting the ways in which they will monetize that data.

‘Phygital’: Digital media becomes physical

The rapid growth of the Internet of Things, which is predicted to double in size from 2015 to 2020,⁹ has enabled digital media to become integrated in the physical world. This development has been most noticeable in two areas: retail and live events.

Media and retail are merging, particularly through advances in connected retail. Digital signage, beacons and Digital out of Home technologies are providing consumers with an entirely different retail experience. While walking around a shop, they can now be given relevant, tailored content, such as videos, offers and specials. It’s been forecast that by 2016, connected retail will influence 44% of retail sales. Live events also have the potential to be transformed, as arenas and venues become connected and media starts to flow inside. The ‘connected stadium’ experience allows fans’ experience of a sports event or concert to be augmented through the availability of replays, special interviews or alerts about merchandise and refreshment deals on their smartphones.

Advicetising: Advertising as personal advice

Traditional advertising is becoming less effective as Internet users react negatively to generic adverts that disrupt their online activity. Marketers are now finding it more effective to provide users with useful, personalized information or advice, while also implicitly or explicitly promoting a brand, product or service. Thanks to advances in data analytics and machine learning, marketers are becoming better at framing these advicetisements but by no means have perfected this technique. Missteps with targeting communications can prove costly to a brand’s reputation as consumers are particularly sensitive to concerns that a company might be exploiting their personal data or manipulating their emotions for commercial gain.